The Bihar riddle: Modi govt clears loco projects but CM Nitish has no time for GE, Alstom chiefs

Close to two months after US major General Electric and French major Alstom were awarded $5.6 billion (Rs 37,000 crore) locomotive projects in Bihar, Chief Minister Nitish Kumar has not found time to meet its India heads.

Well-placed sources told Firstpost that request for a meeting with Nitish Kumar from the heads of two global giants is pending for long. The formal meetings would go a long way in breaking the ice with the state government, speed up decision-making and get the bureaucracy moving.

Railways has requisite land for the projects but a host of clearances, including getting road links between Patna and Madhepura, Patna and Marhowrah, are needed for movement of heavy machinery and equipment.

The projects involve manufacturing 1,000 diesel locomotives and 800 electric locomotives over the next 10 years.

Bihar CM Nitish Kumar. Reuters

GE, the US multi-national behemoth, will set up the diesel locomotive factory at Marhowrah. While 100 will be imported, the rest will be manufactured here as part of the Make in India initiative.

At Madhepura, French major Alstom will set up a factory to manufacture high-power electric locomotives.

The Marhowra project involves a cost of Rs 2,052 crore while the Madhepura manufacturing unit will involve a cost of Rs 1,293.57 crore.

First proposed in 2006, the biggest FDI investment in Railways and that too, in Bihar, was cleared by the Modi government two days after the Assembly results in November last year. At the formal signing of contract agreements with the two corporates in Delhi, re-elected Bihar CM Nitish Kumar was not around.

His absence was surprising given that Bihar, a state that is not a natural destination for private investment let alone foreign investment, would see its economy transform with these major locomotive projects. Apart from creating thousands of jobs it would also give a fillip to local ancillary industries required to service the two projects.

The proposals were mooted during the tenure of Lalu Prasad Yadav as Railway Minister in the UPA government.

Modernisation of locomotive building through public-private-partnership (PPP) was suggested and some of the biggest names in locomotive industry such as Siemens, GE, Alstom and ABB showed interest.

From 2006, the proposal to set up locomotive factories under PPP went through changes and in February 2010 it got final approval from the Union Cabinet. The process of selection started soon after in March.

The entire process then started getting delayed. Dates for price bids were continuously postponed and finally in July 2011, the Railways announced an indefinite postponement.

No one knew or were willing to divulge the reasons for the delay.

Lalu Yadav was succeeded by Mamata Banerjee, Dinesh Trivedi, Mukul Roy, CP Joshi, Pawan Kumar Bansal and Mallikarjun Kharge until the Lok Sabha elections in 2014 but there was no change in the status of the projects.

From GE, Siemens, ABB and Alstom leading global locomotive companies tried to get clarity and waited for responses but, nothing came their way.

Former Prime Minister Manmohan Singh and finance minister Pranab Mukherjee — who never missed a chance to call for greater foreign investment in India — kept up their silence on why Railways had not implemented the Cabinet proposal to set up the locomotive projects in Bihar.

Bidding process went on for three to five years, and finally it was after Narendra Modi took over as Prime Minister that the projects were pushed towards closure. It was Modi’s intervention that led to price bids being opened in August-September and the announcement made in November.

But, why is there lack of interest from Bihar government now?

Two months have passed since the contract was signed but Nitish Kumar still remains "too busy" to meet heads of two major global companies for a project that is sure to give a big boost to Bihar's economy.